Unequal opportunities: life chances for children

Unequal Opportunities:
Life chances for children in the ‘Lucky Country’
Unequal Opportunities:
Life chances for children in the ‘Lucky Country’
The Smith Family
(02) 9085 7222
Level 9, 117 Clarence St
Sydney NSW 2000
GPO Box 10500
Sydney NSW 2001
Further information may also be found at:
www.thesmithfamily.com.au
This report was written by Rebecca Cassells,
Justine McNamara, Honge (Cathy) Gong
and Sharon Bicknell
Copyright © 2011 The Smith Family
Acknowledgements
We wish to thank and acknowledge the contributions of:
The AMP Foundation
National Centre for Social and Economic Modelling (NATSEM)
The Smith Family and NATSEM would like to thank the secondary and tertiary Learning for Life students who
reflected on life chances in Australia. Their thoughts can be found throughout this report.
A Message From The Smith Family
We like to think that all children, regardless of
their background, have the chance to realise their
potential and share in the prosperity that Australia
has to offer. As an organisation committed to
unlocking opportunities for disadvantaged children
and young people, The Smith Family is keen
to test this perception. We wish to understand
whether children really do have an equal
opportunity to develop the skills they need to fully
and effectively participate in society and succeed
in life.
The Smith Family and NATSEM, with the support
of the AMP Foundation, presents Unequal
Opportunities: Life chances for children in the
‘Lucky Country’, the first report in a series looking
at factors influencing children’s life chances in
Australia.
The report looks at social mobility and shows that
higher wage and educational attainment outcomes
are more likely for those who come from welloff families, than for those from poorer families.
More than 65% of individuals whose parents
had a university degree, attained university
qualifications, compared with only 30% attainment
for those from more disadvantaged families.
Further, 50% of those people whose fathers were
managers or professionals ended up in these high
status occupational categories, compared with
less than 10% of people whose fathers were in the
least well paid and lowest status occupations.
The report shows that 12.7% of children are
currently living in jobless households. More
serious still, is the fact that close to three
quarters of this group have been living in a
household that has been jobless for two or more
consecutive years. Knowing that the life chances
for this group are considerably poorer, this is
a call to action for us to provide the support
these young people need to improve their own
circumstances and break out of the cycle of
disadvantage.
For children growing up in jobless households,
education essentials can be difficult to access,
like school uniforms and shoes, the right reading
and text books, or a computer for children to
develop the skills required in the 21st century
classroom and workplace. When children are
unable to ‘fit in’ their confidence, self-esteem and
aspirations are likely to suffer and they may not
feel that they belong at school. Their participation
in extracurricular activities may be curtailed by
their family’s capacity to pay. As these children
grow up, we find that their parents may also
struggle to offer guidance with school work and
career choices and they can be further impacted
by the lack of role models in their extended
family network helping to influence job and study
choices.
The Smith Family helps disadvantaged Australians
to get the most out of their education so they
can create better futures for themselves. Our
strategy is to not only provide financial support for
education essentials for disadvantaged children,
but also to enable them to develop their skills
and capacities through our literacy programs
and mentoring support. Our evidence has shown
that our holistic and long term approach benefits
not only the individual, but also their family, while
strengthening their community.
It is important that we understand whether our
national collective efforts are working to improve
the life chances for children and young people in
Australia. The Unequal Opportunities report series
will help us keep track of whether we are making
a difference, as we work towards a vision where
every child has the chance of a positive future in
our ‘lucky country’.
Dr Lisa O’Brien
Chief Executive Officer
The Smith Family
3
A Message From AMP
Australia is often referred to as the ‘lucky country’
– a widely used phrase taken from the eponymous
1964 book of social critic Donald Horne. The
‘lucky country’ idiom has been used in many
contexts – most often as a favourable reference
to Australia’s beautiful weather, rich natural
resources and as an affirmation of the Australian
way of life.
But Donald Horne’s words were in fact intended
as a harsh indictment of 1960s Australia and as a
criticism of Australia’s success through luck rather
than innovation. His words were meant to ignite
change and draw attention to a range of social,
economic and political policies which couldn’t
appropriately address decision making in the
national interest.
This NATSEM report, Unequal Opportunities:
Life chances for children in the ‘Lucky Country’,
reflects on Donald Horne’s commentary of
Australian society by examining the equality of
opportunity for young people in Australia. Are
innovative social policies creating a fair Australia
for all? Can children born into low socio-economic
families access the opportunities they need
to reach their potential and break the cycle
of disadvantage? Are the children of less well
educated parents less likely to succeed?
It is this relationship between education,
financial stability and employment which sheds
light on the extent of unequal life opportunities
for disadvantaged groups. This report measures
the social mobility of Australia’s children relative
to their parents; examining the change in
4
socio-economic status across generations and
the role that education plays. For example, one
of the findings of this report is a clear pattern of
higher earnings for individuals whose fathers have
achieved high education levels.
The impact education has on our children’s lives
is most evident from this report – a finding which
reinforces the essential work of national children’s
charity, The Smith Family, which partnered
with NATSEM to develop the indicators for this
report. The Smith Family is committed to helping
disadvantaged children unlock opportunities
through education and learning.
The AMP Foundation works with The Smith Family
to achieve its goals, and has supported The Smith
Family as a community partner since 2004. The
AMP Foundation provides funding to support
the Learning for Life program, iTrack, an online
mentoring program, and Indigenous education
programs.
Craig Meller
Managing Director
AMP Financial Services
Contents
Introduction
2
Measuring Equality of Opportunity in Australia
3
Key Findings
5
Detailed Findings
7
Indicator 1: Children and youth living in jobless households
7
Indicator 2: Persistence rates of children in jobless households
8
Indicator 3: Relative financial disadvantage
9
Indicator 4: University participation for low SES students
11
Intergenerational Mobility in Australia
12
13
Measuring Intergenerational Mobility
Indicator 1: Measuring mobility through earnings
14
Indicator 2: Measuring mobility through educational attainment
15
Indicator 3: Measuring mobility through occupational attainment
18
Conclusion
20
Technical Notes
22
References
23
Introduction
The importance of education and sufficient
financial resources in equipping children and
young people with the skills they need to succeed
in life, to open doors and enhance social mobility,
has been well documented. The overarching
goals of the Australian Government’s ‘education
revolution’ and social inclusion agenda, reflect
this importance with a stated focus on increasing
participation in education and training.
Despite substantial concern about these issues,
there has been to date very little research or
regular indicators which focus specifically on
equality of opportunity for Australian children.
How can we tell if Australia is meeting the
government’s vision of a ‘socially inclusive society’
in relation to the life prospects of children and
young people?
To what extent are we as a society enabling
children born into low socio-economic status (SES)
families to access the opportunities they need to
make a better life for themselves and break the
cycle of disadvantage?
Put simply, are we really the ‘lucky country’,
the land of the ‘fair go’ where children are able
to reach their potential regardless of their
background?
2
Unequal Opportunities - Introduction
The Smith Family and NATSEM have developed a
suite of indicators that capture aspects of equality
of opportunity and social mobility of Australian
children and young people, which can be used to
assess whether any change is taking place and if
so, in what direction.
A key goal of this research report is to assess
the degree to which our society is able to provide
children and young people with the opportunities
to develop the skills they need to participate
effectively, especially those most financially
disadvantaged. This is important, not only from
an equity perspective, but also an economic
perspective. As a nation we need individuals to be
able to leverage new educational opportunities,
adapt career trajectories, contribute economically
and reach their potential regardless of their social
status, background or income in order to achieve
productivity and participation goals.
Also included in this report is a feature piece that
delves further into the concept of intergenerational
mobility within Australia.
This section looks at an additional set of
indicators to test whether those from less
advantaged backgrounds have the same likelihood
of moving up the social hierarchy to a higher
income or occupational ranking as those from
more advantaged backgrounds.
Measuring Equality of Opportunity in Australia
Many indicators of opportunity and disadvantage
exist that can be used as proxy measures of
equality of opportunity. Often these indicators
are quite different for developed and developing
nations. For example, child mortality and
access to clean water are important indicators
in developing nations, whereas in countries like
Australia, the focus has shifted towards broader
indicators of social inclusion. Common indicators
include measures of income, poverty and other
forms of material deprivation, educational
opportunities and achievements, and social and
economic participation.
There is strong agreement among researchers
and policy makers as to the need for regular
review of indicators on many aspects of social
progress and wellbeing. Both in Australia and
internationally, the importance of monitoring
children’s wellbeing is widely accepted as a vital
part of making sure that progress is being made
and that policies and programs are working
effectively (Annie E. Casey Foundation, 2010;
Victorian Department of Human Services, 2006).
Initiatives such as the Children’s Headline Indicators
Project, the ARACY Report Card on the Wellbeing of
Young Australians, the Australian Early Development
Index and NATSEM’s small area Index of Child Social
Exclusion risk, all demonstrate the increasing
importance placed on data about children’s
Unequal Opportunities - Measuring Equality of Opportunity in Australia
Equality of opportunity:
The degree to which a society is able to
provide its members with the opportunities
to develop the skills they need to participate
effectively.
These opportunities should be available to
all members of the community, regardless of
the circumstances of their birth, their family
history or the other socio-economic challenges
they might face over the life course.
wellbeing. They are vital tools in evidence-based
social policy and not only provide information about
how well or poorly a country is doing, but can also
be of real use for targeting intervention programs
and policies, leading to a more efficient and
purposeful allocation of resources.
In this new research report series, four indicators
have been chosen to focus specifically on the
inequality of opportunities experienced by children
and young people in Australia. These indicators
cover a range of dimensions of disadvantage and
opportunity that have implications for the current
and future prospects of Australian children and
young people.
3
Equality of opportunity indicators
Indicator 1: Children and youth living in jobless households
Indicator 2: Persistence rates of children and youth living in jobless households
Indicator 3: Relative financial disadvantage
Indicator 4: University participation for low socio-economic status (SES) students
The first two indicators are measures of family
participation in paid work. This captures two
important elements: the financial resources likely
to be available within the family; and the presence
of a role model to assist the child’s future work
participation. This has been measured at a single
point in time, and also to measure persistence,
that is, to show the extent to which the same
children are experiencing disadvantage over a
longer time period.
The third indicator examines the extent of income
inequality that exists for children growing up in
Australia, measuring differences between children
living in Australia’s least affluent and most affluent
households.
Finally, an indicator has been included which
shows the degree to which Australia is providing
the opportunity for movement among generations
by measuring the proportion of young persons
from a low SES background who are currently
attending university.
A time series and a measure of the change
in the indicators from the previous period
to the current period have been included in
order to gauge whether there has been an
improvement, worsening or stagnation over
time of disadvantage and equality of opportunity
in Australia. A brief discussion of some of
the reasons for these changes has also been
included.
Justification of our selection of indicators and
some discussion about their relationship to
wellbeing and outcomes is provided in the
‘Detailed Findings’ section of this report.
About the HILDA dataset
The Household, Income and Labour Dynamics in Australia (HILDA) survey has been used
throughout this report. HILDA is the first extensive household panel survey to be conducted in
Australia, and includes over 13,000 survey respondents each year. HILDA is a dataset that is
representative of the Australian population, and is used extensively in Australian research as
it provides rich data about economic and subjective wellbeing, and labour market and family
dynamics. It has been conducted every year since 2001.
I have a fundamental belief in the power of individuals to change the world they
live in - anybody, anywhere, can have a positive impact on the world regardless
of their background or socio-economic status. I believe that education is the
great enabler in that it empowers individuals to take control of their lives and
to focus on goals and objectives for the future.
Tom*, 20 years
*Name has been changed
4
Unequal Opportunities - Measuring Equality of Opportunity in Australia
Key Findings
The four indicators of disadvantage and
opportunity for Australian children and youth,
along with the dimension of disadvantage they
are capturing, are shown below in Table 1. This
table shows the most recent measurement
of each indicator and any change from the
previous period. For some of the indicators, an
improvement would be indicated by a movement
downwards – such as the proportion of children
living in jobless households, and the persistence
rates of children living in jobless households,
whereas for others a movement upwards
would demonstrate improvement – such as the
proportion of university students from a low
socio-economic background.
From Table 1 it can be seen that most of the
indicators have remained relatively stable between
2008 and 2009, with some marginally improving,
and others marginally worsening.
The proportion of children living in a jobless
household decreased slightly from 2008 to 2009
from 13.4% to 12.7%. The proportion of children
living in persistently jobless households in both
2008 and 2009 also decreased slightly from
9.4% in 2008 to 8.9% in 2009.
Table 1: Indicators of disadvantage and opportunity in Australia
Indicator
Dimension
2008
2009
% point
change
from last
period
%
%
%
Movement
Children and youth in jobless
households
Financial resources,
lack of role model
13.4
12.7
-0.7
Improved
Persistence rates of
children and youth in jobless
households
Persistent financial
disadvantage, lack of
role model
9.4
8.9
-0.5
Improved
Relative financial disadvantage
Inequality, financial
resources
3.4
3.1
-0.3
Improved
Proportion of university
students from a low SES
background
Social mobility,
opportunity, inequality
16.4
15.1
-1.3
Worsened
Note: Children and youth in jobless households are dependent persons aged 0-14 years, living in households where no adult is
engaged in paid work. Relative financial disadvantage = ratio of median household income of the bottom 20 per cent of the child
population, to the top 20 per cent of the child population. Low SES background has been defined as those persons who grew up in a
household where the father’s highest educational attainment was year 10 or below. High SES background has been defined as those
persons who grew up in a household where the father’s highest educational attainment was university level.
Source: NATSEM calculations from the Household, Income and Labour Dynamics in Australia Survey (HILDA), 2007, 2008 and 2009.
Unequal Opportunities - Key Findings
5
Children and young people live in households
with varying levels of income. Here we have
looked at the difference between household
incomes for those children and youth living in
the poorest households in Australia and those
living in the richest households. The gap in
household income between these two groups
of children improved between 2008 and 2009,
with household incomes of children living in the
richest households being 3.1 times the household
incomes of children living in the poorest
households.
The proportion of university students from a low
SES background decreased by over 1 percentage
point during this period from 16.4% to 15.1%.
How are we tracking?
Dependent children and youth living in
jobless households in Australia: 12.7%
Persistence rates of children and youth
living in jobless households: 8.9%
Around 12.7% of dependent Australian
children and youth live in households
where no adult is engaged in paid work.
This proportion has decreased marginally
since the previous year.
8.9% of dependent Australian children
and youth have been living in a jobless
household for two years. This proportion
constitutes 76% of all children and youth
living in jobless households, and has
decreased very slightly since the
last period.
Relative financial disadvantage: 3.1
Proportion of low SES university
students: 15.1 %
Children living in the richest households in
Australia have on average 3.1 times the
household income of children living in the
poorest households. This equates to an
annual difference of over $40,000.
6
Unequal Opportunities - Key Findings
Of all university students in Australia, only
15.1% are from a low socio-economic
(SES) background. This proportion has
decreased since the previous year.
Detailed Findings
Indicator 1: Children and youth living in jobless households
in a household. The proportion of children in
jobless households is therefore an important
proxy indicator for the level of inequality of
opportunity experienced at this critical period in
their development.
Growing up in a jobless household is a well
established measure of child wellbeing, both
in regard to children’s economic security
during childhood and in relation to their future
educational and work opportunities (OECD,
2005). The many benefits of children growing up
in households where the parents are participating
in paid work include the increased achievable
standard of living, reducing the likelihood of
these children living in poverty, as well as the
contribution of a role model in encouraging
aspirations of workforce participation for children
In Figure 1, the proportion of children living in
households where no adult is in paid work is
shown for children aged 0-14 years and for
children and youth aged 0-18 years. The chart
tracks changes in this proportion between 2002
and 2009.
Figure 1: Children living in jobless households
Proportion of children in
a jobless household
20%
15%
10%
5%
%
2002
2003
2004
Children (0 -14)
2005
2006
2007
2008
2009
Dependent Children (0-18)
Note: Children in jobless households are those households where a child resides and no adult is currently engaged in paid work.
Source: NATSEM calculations from HILDA.
Over the eight years to 2009, the proportion of
children living in jobless households has fallen
considerably in Australia overall. The largest
decrease took place during the period from 2004
to 2006, and is likely to have been influenced by a
combination of factors, including strong economic
growth and the introduction of the Welfare to
Work reforms by the Australian Government in
July 2006. One of the main goals of the Welfare
to Work reforms was to increase the labour force
participation of single parents by changing the
timing and nature of work requirements related
to the receipt of income support. In 2002, more
than 18% of Australian children aged 0-14 years
were living in a jobless household – this fell to
13% by 2006, and has since remained steady.
Unequal Opportunities - Detailed Findings
Interestingly, the proportion of dependent
children living in a jobless household continued
to decrease in 2008 and 2009 – a period when
the global financial crisis (GFC) was affecting
Australians the most. Unemployment rates in
Australia increased to 5.8% in June 2009, up
from a 30 year low of 4.1% in March 2008. This
increase in unemployment was relatively minor
when compared with the economic downturns
experienced in the early 1980s and 1990s, where
unemployment rates soared above 10%. Further,
during this most recent economic downturn, it
was younger Australians aged in their late teens
and early twenties who were more likely to be
unemployed than any other group, and they are
much less likely to have had children.
7
While having a working adult within a household
can be extremely beneficial for children, in
that it has strong links with better social and
economic outcomes, paid employment may
not always improve families’ financial resources
to any great degree, for example it may be
intermittent and low paid part-time work. Further,
the added stress of paid work for some families
(for example, for those with limited access to
informal supports, poor job opportunities and no
public or private transport) may have detrimental
effects on overall family wellbeing. The indicator
used here does not capture the amount or
quality of work being undertaken by adults in the
household, nor any additional stresses that paid
work may be introducing. These issues should be
kept in mind when interpreting the findings.
Well if Mum did work (not that she fully can due to adverse health) we might have
a slight rise in income but we wouldn’t see her. Her last job had very long hours.
Minimum wage. Not very rewarding...we barely managed to scrape by, just like now.
Erica*, 19 years
Indicator 2: Persistence rates of children in jobless households
As unemployment or non-participation in
the labour market is often temporary, it is
important to measure how many Australian
children have lived in a jobless household
for consecutive periods. Children living in
a persistently jobless household can be an
indicator of entrenched disadvantage and an
indicator of reliance on income support. These
have been shown to have strong links with a
lack of intergenerational mobility: that is, there
is a greater likelihood of such children also
being reliant on welfare payments as adults
(see for example Baron et al., 2008).
Figure 2 shows the proportion of Australian
children who have lived in a jobless household for
two consecutive years. As with children living in
jobless households in any one period (shown in
Figure 1), the persistence rates of children aged
0-14 years living in jobless households decreased,
from a high of 13.1% in 2004, to a low of 8.7% in
2006. Persistence rose slightly in 2007, to almost
10% and has declined slightly since. In 2009,
8.9% of all Australian children aged 0-14 years
had lived in a persistently jobless household. This
proportion constitutes around three quarters of all
children living in a jobless household.
Proportion of children living in a
jobless household for two years
Figure 2: Persistence rates of children in jobless households
14%
12%
10%
8%
6%
4%
2%
%
2002 & 2003
2003 & 2004
2004 & 2005
Children (0-14)
2005 & 2006
2006 & 2007
2007 & 2008
2008 & 2009
Dependent Children (0-18)
Note: Persistence of children in jobless households are those households where a child resides and no adult has been engaged in
paid work over the last two years.
Source: NATSEM calculations from HILDA.
*Name has been changed
8
Unequal Opportunities - Detailed Findings
Indicator 3: Relative financial disadvantage
Regular and sufficient household income plays
a vital role for a growing child, facilitating the
provision of adequate resources and minimising
household financial stress. Being able to afford
basic necessities such as a decent home to
live in, food on the table and clothing is as
important as it ever has been, but increasingly
other resources attached to education such as
computers, access to the internet and school
excursions are becoming more and more
important. Access to a computer and the internet
are increasingly essential as tools to participate
fully in education, allowing children to research
homework and assignments, and for young
people to participate in the increasingly dominant
world of online social networking. While there
is vigorous debate about the possible negative
influences of the internet on child and youth
wellbeing, its subjective importance in the lives of
young people, and the extent to which exclusion
from this resource due to financial constraints
may be widening divisions between more and
less affluent children and families, make digital
access an issue of concern in relation to financial
disadvantage.
Other additional educational supports that can
be purchased by more affluent families, including
summer schools, tutoring, extracurricular
activities and even sports and leadership camps,
all contribute towards inequality of opportunity
and a less than even playing field for kids from
low SES backgrounds to compete on.
In both developing and developed nations, there
is inevitably a division between the economic
resources available to individuals. This division is
often termed ‘inequality’, and can be measured
in a number of ways but most generally in terms
of the differences in income between groups
of people within a society. Income inequality
has been shown to have strong links with many
negative social outcomes including social and
political unrest, crime, reduced social cohesion
and unequal education and health outcomes
(Pickett, 2009).
The difference between the income available to
children living in the wealthiest and least wealthy
households provides us with a measure of the
extent of inequality that exists among children
in Australia. We measure this by looking at the
disposable (after tax) household incomes of
families with children, after first equivalising
these incomes to account for differences in
household size. We then allocate children into
five equal groups by the level of their household
income – children living in Australia’s least well
off households are those children who live in
households where income is the lowest (the
bottom 20 per cent), while those in the most well
off households are those with the largest amounts
of household income (the top 20 per cent). We
also look to see what the household income is
at the median – that is, at the midpoint of the
distribution of household incomes for all Australian
children. In Figure 3 we show these results by
comparing median household incomes in the
bottom 20 per cent group with median incomes in
the top 20 per cent group and the overall median
household income for children.
The comparison between the top and the bottom
shows the difference in material resources (using
household income as a proxy for this) available to
Australia’s most and least financially advantaged
children. The comparison between the bottom
group and the median shows us the gap between
the least financially advantaged children and those
who we might think of as being in the middle in
terms of household income.
[Having low funds]...I suppose
it made me feel very awkward
and shy among my peers and
teachers resulting in me not
participating in class activities
and getting low grades.
Mark*, 18 years
*Name has been changed
Unequal Opportunities - Detailed Findings
9
Figure 3: Relative financial disadvantage
Ratio of income of children in
richest and middle households
to poorest households
4.00
3.75
Gap between richest and
poorest Australian children
3.50
3.25
3.00
2.75
2.50
Gap between middle and
poorest Australian children
2.25
2.00
1.75
1.50
1.25
1.00
2002
2003
2004
Children (0-14)
2005
2006
2007
2008
2009
Dependent Children (0-18)
Note: Relative financial disadvantage = Ratio of median household income of the bottom 20 per cent of the child population, to the
top 20 per cent of the child population and the 50th (middle) percentile of the child population. Income is calculated and applied using
disposable household income of households with children. Income is from all sources, including earnings and government benefits.
Income has been equivalised to account for differing household sizes – see technical notes for more information.
Source: NATSEM calculations from HILDA.
Figure 3 shows that the most well off one-fifth of
Australian children (ranked by household income)
had access to 3.1 times the economic resources
of the poorest one-fifth of Australian children in
2009. This equated to an annual dollar difference
of more than $40,000 (see Figure 4). While the
gaps between the bottom one-fifth and the median
are not as large, they are still substantial, with
children at the median living in households that
have on average 1.9 times the income of those
living in the poorest households.
When looking at this indicator over time, it can
be seen that relative income (that is, the size
of the difference in incomes) has remained
relatively stable between 2002 and 2006, with
richer children having on average 3.1 times more
economic resources than the poorest 20 per cent
of Australian children across this period. In 2007,
inequality rose sharply, with the gap increasing
to over 3.5, but then narrowed again after this
period. The reasons for the change we see in the
2007 data may be complex, but this was a period
of high wages growth in Australia, which could
have increased incomes at the top end of the
distribution more than incomes at the bottom end.
The narrowing of the gap again between 2007
and 2009 (back to around 3.1) may possibly
be an outcome of the GFC, where incomes in
households in the wealthiest group did not grow at
rates similar to those prior to this period.
Figure 4: Dollar difference in household income of richest and poorest Australian children –
equivalised disposable income
$70,000
Equivalised
household income
$60,000
$50,000
$40,000
$61, 643
$30,000
$20,000
$10,000
$19,724
$0
Bottom quintile
Top quintile
Note: Income is from all sources, including earnings and government benefits. Income has been equivalised to account for differing
household sizes – see technical notes for more information.
Source: NATSEM calculations from HILDA.
10
Unequal Opportunities - Detailed Findings
Indicator 4: University participation for low SES students
Access to and participation in higher education
has been shown to increase life opportunities and
outcomes for individuals – particularly those from
a low socio-economic background (d’Addio, 2007).
Further, harnessing the skills and talents of all
individuals, regardless of their background, can help
to strengthen the economic potential of a country, by
making the most efficient use of its human capital.
Increased participation in higher education from those
with a less advantaged background can also be a sign
of greater social mobility within a society.
Access to university education has not always been
equitable, with persons from a low socio-economic
background and those from regional and remote
areas less likely to attend university than other
Australians (Bradley, 2008). In 2008, the Australian
Government implemented a recommendation from
the Bradley Review into higher education, which sets
a goal of low SES background students making up
20% of all enrolled university students by 2020. The
measurement of low SES has been a contentious
issue, with current approaches using a geographic
socio-economic score, based on the current address
of the student. There are several issues with this
measurement, including the variability of persons
living within a geographic area. A measure based on
geography assumes that a person residing in a low
socio-economic area is themselves from a low socioeconomic background. Another obvious flaw of this
measure is that students often move away from their
home in order to study at university, so using the
current address of the student can be misleading in
terms of capturing their socio-economic background.
The use of survey data for our indicators has allowed
us to utilise a more precise, individual-based measure
to capture student socio-economic background. The
father’s education level has been found to be one of
the most reliable measures of the socio-economic
status of a family (see for example OECD, 2010;
d’Addio, 2007) and so we have applied this measure
to determine the extent of university participation
for persons from a low socio-economic background.
Low SES has been defined as those persons whose
father’s highest educational attainment was year 10
or below, and high SES is defined as those whose
father’s highest educational attainment was university
level. In the absence of a father in the household, the
mother’s educational attainment has been used. While
this is a well-accepted measure of SES, it is important
to note that this is also simply a strong proxy for SES:
while it will usually capture fairly accurately a person’s
socio-economic status when growing up, this will not
always be the case – for example, some children
growing up in families where the father’s educational
level was low will nevertheless not have experienced
substantial economic disadvantage.
The time series of university participation presented
in Figure 5 shows that the proportion of low SES
students aged 18-25 years, climbed slowly from
2005 to 2008, but has since decreased, with low
SES students currently comprising around 15%
of all students enrolled in a bachelor level degree.
The proportion of high SES students has remained
relatively stable over the whole period, falling slightly
from 2005 to 2007, increasing in 2008 – and falling
marginally in 2009. Currently high SES students make
up around 44% of all university students. This decrease
in 2009 was sharper for low SES students than for
high SES students in the same period. This may be in
part a reflection of an increased necessity for some
would-be students to remain in the labour force and
the deterrent of extra and increasing educational
costs on already stretched household budgets.
Figure 5: Proportion of low and high SES university students
Proportion of persons aged
18 - 25 currently studying
for a bachelor degree
45%
40%
35%
30%
25%
20%
15%
10%
2005
2006
2007
High SES
2008
2009
Low SES
Note: SES background has been defined by the educational attainment of the father (or mother in the absence of a father), when the
individual was aged 14 years. Low SES has been defined as those persons where the father’s highest educational attainment was
year 10 or below, and high SES as those whose father’s highest educational attainment was university level.
Source: NATSEM calculations from HILDA.
Unequal Opportunities - Detailed Findings
11
Intergenerational Mobility In Australia
Studies that seek to measure the extent of social
mobility within Australia are rare. In this report, we
extend our findings in the indicator section, to look
further into this important social and economic
indicator, exploring the notion of Australia as a ‘land
of opportunity’.
or wealth, social mobility is expected to be high.
Weak social mobility is a signal of a lack of equal
opportunities which will hinder productivity and
restrain economic growth by misallocating human
resources and decreasing motivation and effort
(OECD, 2010: Cobb-Clark, 2010).
In sociology and economics, as well as in common
discourse, social mobility refers to the degree
to which an individual’s status is able to change
in terms of their socio-economic position. The
status change evident across generations such as
that between a parent and their child is known as
intergenerational mobility. It represents the ability of
children to acquire a higher standard of living than
their own parents had as children.
Social mobility is often seen as a goal of many
developed countries and their people, as a
worthwhile aspiration on the grounds of equity
or economic efficiency, or both (OECD, 2010). It
can also reflect a measure of how equitable and
fair a society is – values that many countries,
including Australia hold. For example, the Australian
Treasury’s wellbeing framework places ‘the level of
opportunity and freedom that people enjoy’, as the
first dimension of wellbeing, around which to place
their policy formation and analysis (Henry, 2006).
Intergenerational mobility can be viewed as one
measure of long-term inequality that may exist
in a society; a measure of the openness within
a society; and the level of equal opportunity by
indicating how far individuals born into a lower
strata can move up to a relatively higher level.
In a society where social standing is determined
by factors that can change across generations,
such as merit, education, skills, abilities, actions
12
Unequal Opportunities - Intergenerational Mobility in Australia
A mobile society may also be associated with
lower levels of inequality and disadvantage, which
in turn can lead to less pressure on public welfare
systems, better health outcomes, and potentially
less conflict and crime. Cobb-Clark has noted that
the more mobility that exists within a society, the
more socially cohesive that society is likely to be
(Cobb-Clark, 2010).
Evidence in Australia that specifically measures
intergenerational mobility is sparse, but the research
that does exist tends to find that in terms of income
mobility, Australia seems to do well when compared
to other OECD countries (Leigh, 2007; OECD,
2010). However, the intergenerational persistence
of poverty, disadvantage and income support
dependence, and a clear link between socioeconomic disadvantage and poorer outcomes in
health, education and labour market opportunities,
are clearly identifiable within Australia, indicating
the existence of unequal life opportunities for
disadvantaged groups.
This feature expands the evidence base about
intergenerational mobility in Australia, examining the
education and occupation outcomes of individuals
born between 1964 and 1978. We compare
individuals’ achievements in these areas with the
level of the family’s socio-economic position when
that individual was growing up.
The main focus of this section is to use the father’s
background and its relationship to outcomes for
the next generation, to analyse the degree to which
intergenerational mobility exists within Australia.
Social mobility:
The ease and frequency with which members
of a society are able to move up the social
hierarchy to a higher income or occupational
ranking, irrespective of their different
backgrounds and starting positions. This
process may occur within an individual’s
lifetime (known as intragenerational
mobility) or across generations (known as
intergenerational mobility).
Measuring Intergenerational Mobility
There are several ways in which intergenerational
mobility can be measured. The key is to determine
a ‘yardstick’ that compares the socio-economic
status of children with that of their parents at similar
life stages. This can be done through knowledge
of earnings, occupation and education; which are
common factors associated with a certain standard
of living and consequently of socio-economic
positioning. The Household, Income and Labour
Dynamics in Australia (HILDA) survey provides details
about the father’s socio-economic status when the
child was aged 14.
In order to assess Australia’s level of social mobility,
we use indicators to examine the education and
occupation outcomes of individuals born between
1964 and 1978. The achievements of these
individuals are then compared with the socioeconomic status of their family when they were
growing up. The father’s background is used to reflect
overall family socio-economic positioning (or where
the father was absent, the mother’s background), as
this is the best indicator of how well the family is doing
in terms of financial and other resources available to
it, and is widely used in the literature as a proxy for
childhood socio-economic status. It should be noted
that this may change for future generations as women
increasingly become the sole or primary breadwinner.
Social mobility is assessed from a variety of
perspectives, using financial, educational and
occupational indicators, some of which are
disaggregated by gender to determine whether
there are significant disparities in the social mobility
Unequal Opportunities - Measuring Intergenerational Mobility
outcomes between sons and daughters. These
indicators are listed below.
It is important to note that all the variables we have
used to measure both background socio-economic
status and socio-economic outcomes are proxies
for these concepts. While we have chosen variables
that are widely used in the literature on social and
intergenerational mobility, characteristics such
as income, earnings and education can only ever
partially capture the complex nature of socioeconomic status. In addition, broad changes (such
as high economic growth, increasing levels of human
capital and growing rates of tertiary education)
that have occurred over the period we examine
below, will of course affect the differences we see
between parental background and child outcomes.
However, the magnitude of the differences we see
in outcomes between adults who grew up during the
same period of time but in different socio-economic
circumstances can still give us a sense of the extent
of intergenerational mobility in Australia.
Intergenerational
mobility indicators
Indicator 1: Measuring mobility
through earnings
Indicator 2: Measuring mobility through
educational attainment
Indicator 3: Measuring mobility through
occupational attainment
13
Indicator 1: Measuring mobility through earnings
In Figure 6, we compare the earnings of
Australians currently aged 30-44 years, based
on the highest educational attainment of their
fathers at a certain point in time (that is, when
the 30-44 year olds were aged just 14). In other
words, we look at the fathers’ education level
when their children were aged 14, and we then
look at the current earnings of the children now
that they have reached adulthood.
A clear pattern of higher earnings for individuals
whose fathers had achieved higher education
levels is shown in Figure 6. For example those
30-44 year olds (men and women) who, when they
were aged 14, have a father who had attained a
university degree, had a higher hourly wage than
those whose father’s highest education level was
Year 10 or below (a difference of around $7 per
hour). Over a 40 hour week, this is a difference of
approximately $280.
Figure 6: Median hourly earnings of persons aged 30-44 years by educational attainment of father
Median hourly wage
$31.00
$29.00
$27.00
$25.00
$29.98
$28.80
$23.00
$24.93
$23.03
$21.00
University
Year 11 or Year 12
Vocational
Year 10 or below
Father’s highest educational qualification
Note: Educational attainment of father is the educational attainment of the father when the child was aged 14 years. Where the
father was not living in the household at age 14, the mother’s education level has been used. Note that not all individuals aged 30-44
years will be in the labour market, and therefore we cannot observe their earnings. Women in this age group will be more likely to be
experiencing a period out of the labour market during this period.
Source: NATSEM calculations from HILDA.
The median hourly earnings of Australians
aged 30-44 years by the occupation level
of the father (i.e. a snapshot of occupation
taken when the son or daughter was aged
14) is shown in Figure 7. The pattern of high
14
Unequal Opportunities - Measuring Intergenerational Mobility
achievement of the father is reflected in the
earnings of the child, although the magnitude of
the differences in hourly wages is slightly less
than when using father’s education as the proxy
for childhood socio-economic status.
Figure 7: Median hourly earnings of persons aged 30-44 years by occupation of father
$28.00
Median hourly wage
$27.00
$26.00
$25.00
$27.43
$24.00
$26.67
$23.00
$24.07
$23.33
$22.00
$21.00
Intermediate
skilled workers
Managers
& professionals
Technicians &
trade workers
Operators, drivers
and labourers
Father’s occupation
Note: Occupation level of father is the occupation level of the father when the child was aged 14 years. Where the father was not
living in the household at age 14, the mother’s occupation level has been used. Note that not all individuals aged 30-44 years will be
in the labour market, and therefore we can not observe their earnings. Women in this age group will be more likely to be experiencing
a period out of the labour market during this period. Occupation has been classified as per the 2006 Australian and New Zealand
Classification of Occupations (ANZCO) – see technical notes for more information.
Source: NATSEM calculations from HILDA.
Indicator 2: Measuring mobility through educational attainment
Figure 8 demonstrates that those people whose
father achieved a university level of education
are much more likely to achieve a university
education themselves, than those whose fathers
did not.
More than 65% of persons aged 30-44 years with
a university-qualified father, had also achieved a
university degree, compared with 53% of those
whose father had reached Year 11 or 12; 42% of
those whose father had a vocational qualification,
and 29% of those whose father had stayed at
school until Year 10 or less.
The fact that almost one-third of Australians
aged 30-44 whose father had very low
educational attainment achieved a tertiary
education themselves, indicates some degree of
intergenerational mobility, but the stark differences
in educational outcomes shown in Figure 8 do
suggest that differences in outcomes are strongly
affected by family socio-economic background.
Figure 8: Highest educational attainment of persons aged 30-44 years, by highest educational
attainment of father
Year 12 or
below (child)
100%
21.3
80%
27.5
31.7
12.8
19.1
60%
40%
26.8
24.6
65.9
20%
0%
46.2
University
53.4
Year 11 or Year 12
41.5
Vocational
Vocational
(child)
University
(child)
29.3
Year 10 or below
Father’s highest educational qualification
Note: Educational attainment of father is the educational attainment of the father when the child was aged 14 years. Where the father
was not living in the household at age 14, the mother’s education level has been used.
Source: NATSEM calculations from HILDA.
Unequal Opportunities - Measuring Intergenerational Mobility
15
When broken down by gender, similar patterns
emerge for sons and daughters – but with some
differences (Figures 9 and 10). Daughters are
more likely to hold a university degree than sons
across any of the educational attainment levels of
the father, and unsurprisingly, sons are more likely
to hold a vocational qualification than daughters.
These differences between sons and daughters for
this age cohort are likely to be related to a number
of social changes, including some traditionally
female-dominated professions, such as teaching
and nursing, now requiring a university degree.
Figure 9: Highest educational attainment of SONS aged 30-44 years, by highest educational
attainment of father
100%
90%
23.5
24.9
80%
70%
Year 12 or
below (son)
26.8
41.9
25.7
60%
50%
University (son)
37.0
30.3
40%
30%
60.8
20%
49.4
36.2
27.8
10%
0%
Vocational (son)
15.7
University
Year 11 or Year 12
Vocational
Year 10 or below
Father’s highest educational qualification
Note: Educational attainment of father is the educational attainment of the father when the child was aged 14 years. Where the father
was not living in the household at age 14, the mother’s education level has been used.
Source: NATSEM calculations from HILDA.
Figure 10: Highest educational attainment of DAUGHTERS aged 30-44 years, by highest
educational attainment of father
100%
90%
80%
70%
19.1
30.0
10.0
50.3
70.9
19.0
57.2
20%
46.9
30.7
10%
0%
Vocational
(daughter)
University
(daughter)
16.5
50%
30%
36.6
12.8
60%
40%
Year 12 or
below (daughter)
University
Year 11 or Year 12
Vocational
Year 10 or below
Father’s highest educational qualification
Note: Educational attainment of father is the educational attainment of the father when the child was aged 14 years. Where the father
was not living in the household at age 14, the mother’s education level has been used.
Source: NATSEM calculations from HILDA.
16
Unequal Opportunities - Measuring Intergenerational Mobility
Educational attainment by family type
Growing up in a single parent family has been
shown to be associated with a lack of financial
resources, and a generally higher likelihood of
welfare dependency, living in poverty and living in
a jobless household.
Figure 11 shows the educational outcomes of
persons aged 30-44 years who grew up in a
two parent or in a single parent family. A higher
proportion of persons who grew up in a two
parent family went on to achieve a university
degree when compared with those from a single
parent household – 42% and 32% respectively.
Further, those who grew up in a single parent
family were more likely to have only completed
Year 12 or less, than those with two parents in
the household. The differences in outcomes are
likely to be driven by the underlying economic
differences that exist between family types,
and to reflect the fact that economic adversity
is itself a risk factor for marital breakdown
and single parent status. It should however be
noted that this data also demonstrates that a
substantial minority of children of single parents
growing up in the 1960s and 1970s did go on
to have good educational outcomes. It is not
yet possible to know how these outcomes may
translate for the current generation of children
growing up in single parent families.
Figure 11: Educational outcomes of those aged 30-44 years, by family type at age 14
100%
Year 12 or below
90%
80%
43.2
34.8
70%
University
60%
50%
40%
Vocational
23.0
25.1
30%
20%
10%
0%
31.7
Single parent family
42.2
Two parent family
Source: NATSEM calculations from HILDA.
Mum was unwell which meant that she didn’t push me to study. They weren’t
able to help with homework. Also because of a different culture they didn’t
understand the importance of my study.
Almaz*, 20 years
*Name has been changed
Unequal Opportunities - Measuring Intergenerational Mobility
17
Indicator 3: Measuring mobility through occupational attainment
Occupational attainment can also be used to
measure socio-economic movement from one
generation to the next, although it is important
to note that occupational classifications are not
always the best measure of socio-economic
status. We know, for example, that being
given the title of manager does not always
equate to high wages and that there is much
socio-economic diversity within occupation
classifications. However, comparing the
occupational attainment of children and their
fathers does provide some additional insights
into intergenerational mobility. Figure 12 shows
that those whose fathers were in higher status
occupations were also likely themselves to be
in occupations associated with higher SES.
More than half of those whose fathers were
managers or professionals, were employed
in these high status occupational categories
themselves, compared with fewer than 30% of
those whose fathers were in the least well paid
and lowest status occupations.
A comparison of sons and daughters shows that they
are roughly each as likely as the other to become
managers or professionals given the occupational
status of the father, but that daughters are less likely
to become technicians or trade workers, and much
more likely to be employed in positions that require
intermediate skill levels such as carers, clerical
workers and sales assistants (Figures 13 and 14).
Sons, on the other hand, are more likely to become
operators, drivers and labourers than daughters.
These differences are likely to reflect differing
education and career decision-making processes
between men and women rather than any differences
in intergenerational mobility.
Anybody with the will and support
can achieve anything. It just takes
a little dedication on your part and
a little help from others.
Kim*, 20 years
Figure 12: Occupation of persons aged 30-44 years by occupation of father
100%
90%
9.1
8.4
80%
70%
15.3
13.3
17.2
12.9
28.9
60%
15.2
30.8
50%
31.5
53.7
40.6
20%
33.2
10%
0%
Managers &
professionals
Intermediate
skilled workers
Technicians &
trade workers
Technicians &
trade workers
Intermediate
skilled workers
36.6
40%
30%
25.5
Operators, drivers
& labourers
Managers &
professionals
27.9
Operators, Drivers
& Labourers
Father’s occupation
Note: Occupation of father is the occupation of the father when the child was aged 14 years. Where the father was not living in the
household at age 14, the mother’s occupation level has been used. Occupation has been classified as per the 2006 Australian and
New Zealand Classification of Occupations (ANZCO).
Source: NATSEM calculations from HILDA.
*Name has been changed
18
Unequal Opportunities - Measuring Intergenerational Mobility
Figure 13: Occupation of SON aged 30-44 years by occupation of father
100%
90%
80%
70%
60%
13.0
19.3
13.0
18.2
20.6
19.5
50%
40%
30%
23.2
33.3
23.3
40.6
Intermediate
skilled workers
16.7
Managers &
professionals
19.3
34.3
10%
Managers &
professionals
Intermediate
skilled workers
Technicians &
trade workers
Technicians &
trade workers
22.9
55.5
20%
0%
Operators, drivers
& labourers
27.1
Operators, Drivers
& Labourers
Father’s occupation
Note: Occupation of father is the occupation of the father when the child was aged 14 years. Where the father was not living in the
household at age 14, the mother’s occupation level has been used. Occupation has been classified as per the 2006 Australian and
New Zealand Classification of Occupations (ANZCO).
Source: NATSEM calculations from HILDA.
Figure 14: Occupation of DAUGHTER aged 30-44 years by occupation of father
100%
90%
4.6
2.7
10.2
3.9
10.9
1.9
80%
70%
41.1
60%
45.2
55.2
50%
15.8
5.7
49.7
40%
30%
20%
Technicians &
trade workers
Intermediate
skilled workers
Managers &
professionals
51.6
40.7
32.1
Intermediate
skilled workers
Technicians &
trade workers
10%
0%
Operators, drivers
& labourers
Managers &
professionals
28.8
Operators, Drivers
& Labourers
Father’s occupation
Note: Occupation of father is the occupation of the father when the child was aged 14 years. Where the father was not living in the
household at age 14, the mother’s occupation level has been used. Occupation has been classified as per the 2006 Australian and
New Zealand Classification of Occupations (ANZCO).
Source: NATSEM calculations from HILDA.
Unequal Opportunities - Measuring Intergenerational Mobility
19
Conclusion
This report, the first of The Smith Family NATSEM
Unequal Opportunities series, has provided
current indicators, capturing information about the
opportunities that may exist for Australian children
and youth. The four indicators, encompassing
important dimensions of disadvantage and
opportunity, show some encouraging results
– especially the consistent decrease in the
proportion of children living in jobless households in
Australia, even in relatively harsh economic times.
Differences in income between children living in
the poorest Australian households and those in the
richest households have narrowed during the GFC,
however appear generally to be at their widest
when the economy is flourishing, illustrating that
good economic times do not necessarily mean
good times for all Australians.
20
Unequal Opportunities - Conclusion
Although the proportion of young people from a
low SES background embarking upon a university
education improved incrementally between 2002
and 2008 (but decreased slightly in 2009), this
group remains significantly underrepresented in
higher education, highlighting the challenge before
us in improving access for this group. This is
critical in order to improve life opportunities and
outcomes for individuals and at a societal level to
make effective use of human capital to strengthen
the nation’s productivity.
Despite the fall in the proportion of children
living in jobless households, and the persistence
rates of children living in jobless households,
further investigation is required to understand
the extent to which the overall quality of life may
have changed for these families, especially given
that having a job may not necessarily translate
into substantial financial benefits, and that other
influences such as the added stress of combining
paid work and a family, poor job opportunities
and reduced quality time spent with children may
offset or reduce the benefits of being involved
in paid work. Also, despite falls in the proportion
of children living in jobless households, the
substantial differences in financial resources
between children in Australia’s most and least
affluent households remained fairly steady across
most of the period included in this study.
Overall, the research conducted in this report,
shows that Australia is doing reasonably
well by our children and youth. However
large inequalities remain, especially in terms
of financial resources available to parents
during their children’s formative years and the
opportunity for children from less privileged
backgrounds to find pathways towards higher
education.
For Australia to progress further, equipping
our children and youth with sufficient financial
resources and providing equal opportunity to all
should be a priority for us all.
The indicators used to measure social mobility
in Australia have uncovered a clear bias towards
higher wage and educational outcomes for those
from more well-off families, as measured by the
educational attainment of the father. The benefits
are particularly strong for those aged 30-44 years
whose fathers had a university degree, with more
than 65% having attained university qualifications
themselves, compared with only 30% attainment
for those whose fathers had left school in Year 10
or earlier. While there are signs of positive mobility
for those whose fathers have very low educational
attainment (with almost one-third going on to
achieve a tertiary education), only 15% of current
university enrolments are from students with a low
socio-economic background, which sits below the
Australian Government’s target of 20% by 2020.
Unequal Opportunities - Conclusion
21
Technical Notes
Data Source
Children in Jobless Households
This research uses unit record data from the
Household, Income and Labour Dynamics in Australia
(HILDA) Survey. HILDA is a longitudinal data source,
which surveys the same individuals from year to year.
HILDA is released annually, with the latest release
Wave 9 – 2009. The indicator section has utilised
the HILDA surveys from 2002 to 2009 in order to
achieve a time series analysis. In 2009, there were
7,234 households and 13,301 responding persons in
the sample. The feature section on intergenerational
mobility has used the 2008 HILDA data set, as
this was the most recent at the time the research
was conducted. The 2008 HILDA data consists of
7,066 households and 12,785 persons. HILDA is a
representative sample of the Australian population.
Children in jobless households are defined as
those children living in households where no adult
is currently engaged in paid work.
Wooden and Watson (2007) provides details of the
design of HILDA and Watson (2010) is the latest
version of the HILDA User Guide.
The HILDA Project was initiated and is funded by
the Australian Government Department of Families,
Housing, Community Services and Indigenous
Affairs (FaHCSIA) and is managed by the Melbourne
Institute of Applied Economic and Social Research
(MIAESR). The findings and views reported here,
however, are those of the authors and should not
be attributed to either FaHCSIA or the MIAESR.
Children and Dependent Children
Children have been classified as those aged 0-14
years. The 0-14 year age group captures a group
of children who are very dependent upon their
carers and particularly vulnerable to the effects
of joblessness and others forms of disadvantage
within a household.
Dependent children have been classified as those
aged 0-18 years and still studying. The 0-18 group
is an increasingly important cohort, especially
as those aged 15-18 are more likely to remain
dependent upon their parents for longer, with the
minimum school leaving age being increased across
the states and territories to 17 years.
22
Unequal Opportunities - Technical Notes
Equivalised Household Income
Equivalising income is a way of taking into
account the size and composition of a household,
given that the same amount of household income
translates into different standards of living for
smaller and larger households. Incomes are
transformed by a factor relevant to the household
size, in order to gain a truer comparison of
household income across different household
types.
Occupation Classification
The Australian and New Zealand Standard
Classification of Occupations (ANZSCO, first
edition), is used by HILDA in order to classify
occupations of persons. We have used the
broadest occupation group available in this
classification - the major (1-digit) ANZSCO group.
Occupations are classified based on the level of
skill. Skill levels are determined by the level of
formal education and/or training and previous
experience usually required for entry to the
occupation. For example, major groups 1 and 2
(managers and administrators and professionals)
would normally have a level of skill commensurate
with a bachelor degree or higher qualification
and/or at least five years relevant experience.
Definition is sourced from ABS Australian and New
Zealand Standard Classification of Occupations,
first edition, ABS Cat No. 1220.0.
References
Baron, J.D., Cobb-Clark, D and Erkal, N. (2008) Cultural Transmission of Work-Welfare Attitudes and the
Intergenerational Correlation in Welfare Receipt, The University of Melbourne, Department of Economics,
Research Paper No.1059.
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Unequal Opportunities - References
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